Nigeria’s imported food inflation jumped to 36.38% in June 2024, from 34.83% recorded in the previous month, which represents a 1.55%-points increase.
According to the Consumer Price Index (CPI) data for June 2024 by the National Bureau of Statistics (NBS), the average price index for imported food rose to 806.0 in June 2024 from 591.0 in the same month of the previous year.
Nigeria’s imported food inflation increased significantly from the 19.10% recorded in June 2023, as naira weakened following the unification of all segments of the forex exchange (FX) market by the Central Bank of Nigeria (CBN).
The unification process in June 2023, aimed at creating a more transparent and efficient foreign exchange market, resulted in a steep depreciation of the naira.
What the data is saying
The NBS data on imported food inflation from January to June 2024 shows a consistent and concerning trend of rising costs.
- January starts the year with a high imported food index and a significant inflation rate of 26.29%, indicating that the cost of imported food is already elevated.
- In February 2024, the imported food inflation increased to 29.81%, marking a notable jump of 3.52%-points in the inflation rate from January.
- The trend continues upward in March, with the imported food inflation rate climbing to 32.89%, an increase of 3.08%-points from February.
- In April, the inflation rate further increased to 34.01%, growing by 1.12%-points from March, showing a slight deceleration in the rate of increase.
- May records an imported food inflation rate of 34.83%, indicating a continued upward trend. The increase in inflation rate is 0.82%-points from April.
- By June, the imported food inflation rate hit 36.38%, marking an increase of 1.55%-points from May.
While the overall trend is upward, the rate of increase in inflation shows signs of gradual deceleration from March to May before picking up again in June.
Imported food inflation exceeds headline inflation
Nigeria’s inflation rate in June 2024 surged from 33.95% in May 2024 to 34.19% in June. The headline inflation rate in June 2024 was 11.40 percentage points higher compared to June 2023, rising from 22.79%. On a month-on-month basis, the headline inflation rate in June 2024 was 2.31%, an increase of 0.17% points from May 2024’s rate of 2.14%.
This indicates that the average price level increased at a faster rate in June 2024 than in May 2024.
With headline inflation at 34.17% in June 2024, it means that imported food inflation, which is at 36.38% in the same period, is at a higher rate in the country.
However, general food inflation is higher at 40.87% for the same period this year.
The food inflation rate in the month under review was 40.87% year-on-year compared to 40.66% recorded in May 2024. This is 15.62%-points higher than the rate of 25.25% recorded in June 2023.
On a month-on-month basis, the food inflation rate in June 2024 was 2.55%, reflecting a 0.26%-point increase from May 2024’s rate of 2.28%. The month-on-month rise in food inflation was driven by the increased prices of items such as groundnut oil and palm oil.
What you should know
Nairametrics earlier reported that Nigeria’s exchange rate closed June 2024 at N1,503.3/$1, marking a 1.3% depreciation for the month.
Nigerians continue to face prolonged periods of exchange rate volatility, as the naira crashed by 40% between the end of December 2023 and June.
The exchange rate closed in 2023 at N907.11 and immediately experienced several volatilities along the way, closing the first half of the year at N1,503/$1.
Nairametrics also reported that the Nigeria Customs Service (NCS) exchange rate for import duties collection rose to N1,508/$1 in the first week of July, which was the highest in the past three months dating back to March 21, 2024, when the exchange rate for Customs import duties stood at N1,572/$.
Such a devaluation increases the local currency cost of goods priced in foreign currencies, directly affecting the cost of imported foods.
In response to the mounting pressure of escalating food prices, the Trade Union Congress (TUC) recently urged the Federal Government to initiate the immediate importation of essential food items as a mitigative measure.
Corroborating this sentiment, Mohammed Idris, the Minister of Information, disclosed the government’s contemplation of food importation as a temporary remedy to alleviate the burgeoning prices of food commodities.
Contrarily, President Bola Tinubu took a stand against the importation strategy, advocating for Nigeria’s potential to achieve self-sufficiency and emphasizing the administration’s commitment to nurturing domestic food production capabilities.
The International Monetary Fund (IMF) also weighed in, pinpointing the acute food crisis in Nigeria and other sub-Saharan nations as a consequence of an excessive reliance on imported foods.
In an effort to curb rising food inflation in the country, the federal government recently approved a 150-day duty-free window to allow the importation of maize, husked brown rice and wheat.
However, the President of the African Development Bank (AfDB), Dr Akinwunmi Adesina, raised concerns over the federal government’s plan to import food, stating that the policy is depressing. According to him, Nigeria cannot rely on food imports to stabilize prices, and resorting to it could destroy the country’s agricultural policy.
Also, the National President of the All Farmers Association of Nigeria (AFAN), Arc. Kabir Ibrahim said that the duty-free importation for food items will lead to the erosion of gains made in local production of maize, rice and wheat. He called on governments to invest through the provision of subsidies on inputs such as machines, fertilizers and chemicals in order to have a sustainable food system in the country.
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